AJMAL MIAN, J.---This is an appeal with the leave of this Court against the judgment dated 15-2- 1988 passed by a learned Single Judge of the High Court of Sindh in Miscellaneous Appeal No.17 of 1980 filed by the appellants, maintaining the order dated 30-9-1979 passed by respondent No.1 (i.e. The Assistant Registrar of Trade Marks), dismissing the appellants' Opposition No.27 of 1974 to the respondent No.2's application No.50071 in Class 25 for registration of trade mark comprising the words "sharp arrow" with device of arrow and globe on a label in respect of ready made garments.
Leave to appeal was granted to consider the question, whether the two Courts below have placed construction on proviso to section 37(1) of the Trade Marks Act, 1940, hereinafter referred to as the Act, in accordance with law with reference to respondent No.2's plea of res judicatd.
2. The facts to be noted are that the appellant is a Corporation organised and existing under the Laws of the State of Georgia, United States of America, and is the successor of Messrs Cluett Peabody & Company Inc., a Corporation organised and existing under the Laws of the State of New York, United States of America, by virtue of merger of the latter into the appellant, which became effective on 15-1-1986. The appellant deals in garments etc. In various countries of the World. As per averments of the appellant in their affidavit before respondent No.1, the appellant company first originated and adopted in or about 1920 a trade mark consisting of the word ARROW and the device of arrow below the word, but in or about 1932 the above trade mark was modified i.e. The word ARROW with the device of an arrow piercing the word. Whereas respondent No. 2 is a partnership firm. It also deals in garments. Respondent No. 2 filed the aforesaid application on 25- 9-1968. Thereupon, respondent No.1's office cited the appellants' registered trade marks, namely, (i) mark "arrow" and word and device of an arrow registered under No.11305 in Class 25 in respect of shirts, collars, cuffs, under-wears, pajamas, night shirts, neck ties etc. And (ii) under registration No.26479 in Class 25 with the words "golden arrow" with the device of an arrow in t respect of articles of wearing apparel, particularly shirts. Thereupon, respondent No.2 applied on Form TM-26 for the rectification of the register with regard to the entries of the trade mark word and device of arrow and words "golden arrow" and device on the grounds contained in section 37 of the Act, namely, (i) that the trade mark was registered without any bona fide intention on the part of the appellants to use the same and (ii) that upto a date one month before the date of application, a continuous period of live years or longer had elapsed during which trade mark was registered and during which there was no bona fide use thereof in relation to those goods. The above rectification proceedings were resisted by the appellants. Respondent No.1, after completion of preliminaries as to the riling of various documents and after hearing the parties, declined the same by his order dated 2-8-1973 and also ordered that respondent No.2's application for registration of their above trade mark was to advertise. The operative portion of the order reads as follows:-- "After carefully considering the arguments of both the learned advocates, the evidence on record and in exercise of the discretion vested in me, I hold that the objection of the applicants cannot be sustained as it is a case of special circumstances. However, I disallow rectification Nos.3(69) and 4(69) and further order that due to special circumstances coupled with honest and concurrent user the mark No.50071 of the applicants for rectification will proceed to advertisement. I further order that in the special circumstances of the case each party to bear its own costs."
3. That in response to the advertisement of respondent No.2's above trade mark in Trade Journal, the appellant tiled Opposition under section 15(2) of the Act, which was declined by respondent No.1 on two grounds, namely, (i) that the appellants had not filed any appeal against his above order dated 2-8-1973 whereby it was ordered that respondent No.2's trade mark was to be advertised due to special circumstances coupled with honest and concurrent user and, therefore, the same constituted res judicata for the purpose of the above opposition, and (ii) that respondent No.2's trade mark also bear their trading style, as such it further distinguishes itself from the mark of the appellants. The appellants riled aforesaid miscellaneous appeal which was dismissed by a learned Single Judge by the judgment under appeal, in which the plea of res judicata was upheld and it was also held that though the appellants obtained registration of their trade marks "arrow" and "golden arrow" in Pakistan but on account of complete ban on the import of ready-made garments etc. Their products were not available in Pakistan and that there was nothing on record that the appellants had in fact used their above trade marks in Pakistan after registration. It was further observed that on the contrary the evidence on record clearly shown that respondent No. 2 when adopted the above marks had not only verified that no such competing mark was available in the market but they continue to use the mark without any obstruction and claim by the appellants. It was further observed that extensive use of the above mark by respondent No.2 was rightly considered by respondent No. t as amounting to honest and concurrent user of the; said mark. Thereupon, the appellants riled a petition for leave, which was granted to consider the above question.
4. In support of the above appeal, Mr. Fateh Ali W. Vellani, learned A.S.C. Appearing for the appellants, has contended, firstly, that both the Courts below have misconstrued proviso to subsection (1) of section 37 of the Act and have wrongly applied the principle of res judicata and secondly, because of the application of the doctrine of res judicata, the appellants' opposition was not considered in right perspective.
On the other hand, Sh. Abdul Aziz, learned A.S.C. Appearing for respondent No.2, has vehemently urged that the two Courts below have placed proper construction to the proviso to subsection (1) of section 37 of the Act and that the appellants' opposition was properly considered, inasmuch as both the Courts recorded concurrent finding of fact on the questions of special circumstances, of honest concurrent user and the distinctiveness of the trade mark applied for and, therefore, this Court will not disturb the same.
5. Adverting to the above first contention of Mr. Vallani that both the Courts below have misconstrued proviso to subsection (1) of section 37 of the Act and have wrongly applied the principle of res judicata, it may be pertinent to reproduce section 37 of the Act, which reads as follows:-- "37.-(1) Subject to the provisions of Section 38, a registered trade mark may be taken off the register ,fin respect of any of the goods in respect of which it is registered on application in the prescribed manner by any person aggrieved to a High Court or to the Registrar, on the ground either--
(a) That the trade mark was registered without any bona fide intention on the part of the applicant for registration that it should be used in relation to those goods by him or, in a case to which the provisions of section 36 apply, by the company concerned, and that there has in fact been no bona fide use of the trade mark in relation to those goods by any proprietor thereof for the time being up to a date one month before the date of the application; or
(b) That up to a date one month before the date of the application, a continuous period of five years or longer elapsed during which the trade mark was registered and during which there was no bona fide use thereof in relation to those goods by any proprietor thereof for the time being: Provided that, except where the applicant has been permitted under subsection'(2) of section 10 to register an identical or nearly resembling trade mark in respect of the goods in question or where the tribunal is of opinion that he might properly be permitted so, to register such a trade mark, the tribunal may refuse an application made under clause (a) or clause (b) in relation to any goods, if it is shown that there has been, before the relevant date or during the relevant period, as the case may be, bona fide use of the trade mark by any proprietor thereof for the time being in relation to goods of the same description--- being goods in respect of .Which the trade mark is registered.
(2) Where in relation to any goods in respect of which a trade mark is registered--
(a) The circumstances referred to in clause (b) of subsection (1) are shown to exist so far as regards non-use of the trade mark in relation to goods to be sold, or otherwise traded in, in a particular place in Pakistan (otherwise than for export from Pakistan), or in relation to goods to be exported to a particular market outside Pakistan; and
(b) A person has been permitted under subsection (2) of section 10 to register an identical or nearly resembling trade mark in respect of those goods under a registration extending to use in relation to goods to be so sold, or otherwise traded in, or in relation to goods to be so exported, or the tribunal is of opinion that he might properly be. Permitted so to register such a trade mark, On application by that person in the prescribed manner to a High Court or to the Registrar, the tribunal may impose on the registration of the first-mentioned trade mark such limitations as it thinks proper for securing that that registration shall cease to extend to such use.
(3) An applicant shall not be entitled to rely for the purpose of clause (b) of subsection (1) or of subsection (2) on any non-use of a trade mark which is shown to have been due to special circumstances in the trade and not to any intention to abandon or not to use the trade mark in' relation to the goods to which the application relates."
6. A plain reading of the above section indicates that a registered trade mark may be taken off the register in respect of any goods upon an application by any person aggrieved to a High Court or to the Registrar on either of the grounds mentioned in above clauses (a) and (b) of subsection (1). It may further be noticed that the proviso, which is in issue, provides that the tribunal may refuse an application under clause (a) or clause (b) in relation to any goods if it is shown there has been, before the relevant date or during the relevant period as the case may be, bona fide use of trade mark by proprietor thereof for the time being in relation to the goods for the same description, being goods in respect of which trade mark is registered except in two cases referred to in the opening part of the above proviso, namely, (i) where the applicant has been permitted under subsection (2) of section 10 to register an identical or nearly, resembling trade mark in respect of the goods in question; or (ii) where the tribunal is of opinion that he might properly be permitted so to register such a trade mark.
It may also be pointed out that above subsection (2) authorises the High Court and the Registrar to impose on the registration of first-mentioned trade mark such limitations as it thinks proper for securing that the registration shall cease to extend to such use if the circumstances mentioned in clauses (a) and (b) thereof are present in a case, namely, (i) non-user of the trade mark in terms of clause (b) of subsection (1) by the proprietor of the trade mark and (ii) a person has been permitted under subsection (2) of section 10 to register an identical or nearly resembling trade mark in respect of those goods which were the subject-matter of registration.
It may further be noticed that under subsection (3) of section 37, it has been provided that an applicant shall not be entitled to rely for the purpose of clause (b) of subsection (1) or of subsection
(2) on any non-use of trade mark which is shown to have been due to special circumstances.
7. Respondent No.1, while declining respondent No.2's above application for rectification, held that there were special circumstances which warranted disallowing of rectification applications but at the same time, he also directed that respondent No.2's application for registration due to special circumstances coupled with honest and concurrent user be proceeded to advertisement.
Accordingly, respondent No.2's trade mark was advertised under Section 15(1) of the Act in the Trade Journal, in response to which the appellants in terms of subsection (2) of section 15 filed opposition. The effect of the refusal on the part of respondent No.1 to allow respondent No.2's above application for rectification, is that the appellants remained proprietor of the above two registered trade marks with the devices. In this regard, it maybe pertinent to observe that section 21 of the Act provides that subject to the provisions of sections 22, 25 and 26 the registration of a person in the register is proprietor of a trade mark in respect of any goods, shall give to that person the exclusive right to use the trade mark in relation to those goods etc. Whereas subsection (1) of section 10 of the Act provides that save as provided in subsection (2) no trade mark shall be registered in respect of any goods or description of goods which is identical with the trade mark belonging to different proprietor in respect of the same goods or description of goods or which so nearly resembles such trade mark a, to be likely to deceive or cause confusion. However, subsection (2) of section 10 provides that "In case of honest concurrent use or of other special circumstances which, in the opinion of the Registrar, make it proper so to do he may permit the registration by more than one proprietor of trade marks which are identical or nearly resemble each other". The conclusion arrived at by the two Courts below is that since in the above order dated 2-8-1973 it was held that due to special circumstances coupled with honest and concurrent user, respondent No.2's application be proceeded with to advertisement, the appellants were not entitled to re-agitate the above question in their opposition to respondent No.2's application for registration of trade mark. In our view, the above conclusion is not in consonance with law. The scopes of section 37 and section 15(2) are different.
In an application for rectification under section 37, the main question which is to be examined is, whether rectification application is to be granted on the grounds mentioned in clauses a and b of subsection 1 or not though in the proviso it has been provided that where the applicant has been permitted under subsection (2) of section 10 to register an identical or nearly resembling trade mark in respect of the goods in question, or where the tribunal is of opinion that he might properly be permitted to register such a trade mark, the rectification application is to be granted. If a rectification application is allowed on the ground that the applicant's trade mark was registered by virtue of subsection (2) of section 10 or that he was entitled to registration of such a trade mark under the above provision, it would be res judicata for the purpose of opposition to an application for registration inter se between the parties to the rectification application. However, if the rectification application is declined, in our view, any observation on the question of honest concurrent user or on the factum of special circumstances in favour of a party, who was applicant in the rectification application, would not constitute res judicata. We are unable to subscribe to the submission of Mr. Abdul Aziz that for the purpose of riling an opposition under section 15(2) of the Act to an application for registration of a trade mark, the expression "any person" used in above provision of the Act shall cover any other person than a party, who was an opponent to a dismissed rectification application under section 37 of the Act. However, Sh. Abdul Aziz has referred to the case of Messrs Beecham Group Ltd. v. Registrar of Trade Marks and another (1968 SCMR 626), in which the facts were that the petitioner company filed suit in the Court of District Judge, Karachi, for grant of a permanent injunction for restraining respondent No.2 from using the name "Fructo Salt" as an imitation of their registered trade mark "Fruit Salt". The relief regarding the trade name of "Fructo Salt" was declined by the Court but the suit in respect of wrappers was decreed. No appeal against refusal of relief in respect of the trade name "Fructo Salt" was filed by the petitioner and the decision on the same was allowed to become final. Later on, when respondent No.2 applied for registration of their trade mark "Fructo Salt" the petitioner objected to it on the same plea which was raised in the aforesaid suit and which was rejected by the civil Court in the aforementioned suit. The Registrar held that the decision given in the above suit by the civil court constituted res judicata for the purpose of the petitioner's opposition to respondent No.2's application for registration. The above view also prevailed with the High Court inasmuch as the petitioner's miscellaneous appeal was dismissed. After that, the petitioner tiled a petition for leave to appeal.
This Court, while declining the same, observed as follows:-- "Leave to appeal is asked for on the ground that the decision in the suit for infringement of trade mark did not operate as res judicata. On hearing the learned counsel we agree with the view which has prevailed in the High Court for even if section 11 C.P.C. Did not in terms apply to the proceedings before the Registrar the principle underlying it would apply under the doctrine of constructive res judicata more particularly as the matter is eventually brought before the High Court in an appeal under the Trade Marks Registration Act. By omitting to appeal against the judgment and decree of the District Judge in so far as he refused to grant the relief in respect of their trade mark "Fructo Salt" the petitioners had disentitled themselves from re-agitating the same claim before the Registrar of Trade Marks. The objections filed by the petitioners to the registration of the trade mark of the respondent were thus rightly rejected."
8. In our view, the above case has no application to the present case, as admittedly respondent No.2's above application for rectification was not allowed and, therefore, there was no occasion for the appellants to have filed an appeal against the order which was in fact decided in their favour. It is true that in the above order dated 2-8-1973, observations were made to the effect that "I further direct that due to special circumstances coupled with honest and concurrent user the mark No.50071 of the applicant for rectification will proceed to advertisement" but the same cannot be construed as res judicata for the purpose of opposition under subsection (2) of section 15 of the Act. As pointed out hereinabove if respondent No.2's above application for rectification would have been allowed on the ground that their application was registered under section 10(2) or was to be registered in terms of proviso to subsection (1) of section 37 of the Act, such a decision on the above issue would have been res judicata.
9. We may also observe that the following construction placed by the High Court on the proviso to subsection (1) of section 37 seems to be contrary to the language employed therein:-- "A careful reading of section 37 will show that the 1st proviso to subsection (1) of section 37 clearly provides that an application for rectification of a mark could be refused by the tribunal if the applicant has been permitted under subsection (2) of section 10 to register an identical or nearly resembling trade mark of the goods in question or where the tribunal is of the opinion that he might properly be permitted so to register such a trade mark. It is, therefore, quite clear that while considering the application of respondent No.2 for removal of the marks of appellant under section 37 of the Act the tribunal was not only competent to consider the right of respondent No.2 to register an identical or nearly resembling trade mark on the basis of honest and concurrent user but such consideration was fully relevant in determining the controversy before the tribunal under section 37 of the Act."
The correct construction appears to be that the Registrar may decline to allow rectification application for the reasons contained in the above proviso except where the applicant has been permitted under subsection (2) of section 10 to register an identical or nearly resembling trade mark in respect of the goods in question or where the tribunal is of opinion that he might properly be permitted so to register such a trade mark. We may further observe that the above proviso to subsection (1) is to be read subject to subsection (3) of section 37, which provides that an applicant in a rectification application shall not be entitled to rely for purpose of clause (b) of subsection (1) or subsection (2) on any non-use of trade mark which is shown to have been due to special circumstances.
10. The effect of above approach of the two Courts below is that they have not applied their mind to the question in issue properly inasmuch as distinction between the scopes of sections 8 and 10 of the Act has been overlooked. We may state that there seems to be a marked distinction between sections 8 and 10 inasmuch as the former section does not refer to the proprietor of registered trade mark, whereas subsection (1) of latter section makes specific reference to it. Under section 8 the Registrar is to examine an application for registration of a trade mark in order to find out, whether it is covered by any of the mischief---s mentioned in clauses (a), (b) and (c) thereof irrespective of the fact that there might not be any opposition. Whereas under subsection (2) of section 10, he is to examine the case from the point of view, whether an application for registration of a trade mark is to be allowed in spite of the fact that there is another proprietor of a registered trade mark applied for, on the ground of honest I concurrent use or because of other special circumstances. Though in the two impugned judgments observations in favour of respondent No.2 as to the honest concurrent user and of special circumstances and also of distinctiveness of their trade mark have been made, but the two Courts after having recorded the above finding on res judicata proceeded to make above observations to re-in-force the conclusion. In our view, this has prejudiced the appellants. It was open to respondent No.1 to have proceeded with respondent No.2's application for rectification and their application for registration of their trade mark together.
In that event the appellants would have been entitled to file opposition under section 15(2) of the Act read with the relevant rules and any decision therein as to the honest concurrent use and/or of the special circumstances, would have been final and binding on the parties to the above two applications.
11. We may observe that the learned counsel for the parties also submitted their arguments on merits with reference to the relevant case law with vehemence, but we, have purposely refrained from expressing our views as we are inclined to remand the case to respondent No.1, with the direction to decide the appellants' opposition on the assumption that the observations as to the honest concurrent user and of special circumstances contained in the aforesaid order dated 2-8- 1973 do not constitute res judicata. We accordingly allow the above appeal and set aside the two impugned judgments. However, there will be no order as to costs.